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Retail investors (that is Mum & Dad's, Self Managed Superannuation investors) are about to be punished by the Australian Securities Exchange (ASX).

Currently, ASX rules require each IPO (Initial Public Offering) to have 300-400 shareholders. This is a major reason that retail investors get some access to IPOs. ASX is now proposing to reduce the number of investors to 100. The proposed changes will mean that retail investors receive even fewer IPO offers.

If the ASX has its way in reducing the number of investors needed for IPOs, this will cement the exclusion of ordinary investors from most IPOs.

As it is most retail investors consider themselves lucky if they get an allocation in an IPO. This is not surprising because over the last 10 years, the average IPO has traded 14.8% higher on its first day than the issue price.

However given the lack of access for retail investors this means we have to pay 14.8% more than big institutional investors because we can only buy the shares after they begin trading! The limited access that retail investors get to IPOs is only going to get worse if the ASX has its way with these rule changes.

In contrast, Hong Kong and Singapore rules require that 25-40% of all IPOs are reserved for retail investors.

Sign the petition to:

1. Ensure that 29.1% of the Australian retirement pool (SMSFs), and all Australians, have a reasonable opportunity to participate in the wealth generation process of IPOs and encourage share ownership.
2. Significantly increase the pool of capital that companies, especially smaller growth companies, can effectively access when they are using the ASX listing process to raise equity.
3. Introduce rules, modelled on Hong Kong and Singapore, to reserve 25-40% of every IPO for retail investors.

If you support the idea of broader, fairer access to IPOs for all Australians, then make sure your opinion is heard by ASX and ASIC by signing the petition.

You can sign the petition here on change.org or add your name at www.getonmarket.com

Alternatively, 

Send an email directly to the ASX: 

Copy & paste the below content into an email:

Send to: regulatorypolicy@asx.com.au
cc. noIPOlockout@onmarketbookbuilds.com
Subject: I say no to IPO lockout for retail investors

Dear Diane

I refer to ASX's request for feedback on its proposal to reduce the number of investors that an IPO must have to list: from 300-400, down to 200 (small co's) or 100 (large co's). Spread requirements cause a small number of shares to be offered to selected retail investors. This is better than zero. But, the proposed reduction will lead to an even smaller amount, if any, of IPOs to be offered to small investors.

ASX's survey found 7.26mil Australians own shares. Online application forms mean getting 400 shareholders isn't onerous, if a general offer is made that guarantees fair allocations to non institutional shareholders. But, spread alone isn't sufficient to give fair access to all Australians wanting to participate.

Hong Kong & Singapore have rules requiring IPOs to reserve 25-40%, respectively, of shares for retail investors. If retail investors don't apply, shares may be allocated to institutions.

I recommend ASX adopt listing rules like HK & Singapore, namely:

1. 400 required shareholder spread
2. retail investors get priority over 25-40% of shares offered in IPOs
3. the allocation process must be defined & fair

An objective of listing rules should be to create fairness for all investors, both in IPOs & trading. ASX's proposal of a minimum free float of 20% does not give retail investors access to IPOs, as the shares can be entirely offered to institutions.

I look forward to your response. Thank you.

END

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